Borders, Geography and Oligopoly: Evidence from the Wind Turbine Industry

Paul Grieco, A. Kerem Coşar and Felix Tintelnot
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Paul Grieco: Pennsylvania State University

No 143, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: Using a micro-level dataset of wind turbine installations in Denmark and Germany, we estimate a structural oligopoly model with cross-border trade and heterogeneous firms. Our approach separately identifies border-related from distance-related variable costs and bounds the fixed cost of exporting for each firm. In the data, firms' market shares drop precipitously at the border. We find that 40 to 50 percent of the gap can be attributed to national border costs. Counterfactual analysis indicates that eliminating national border frictions would increase total welfare in the wind turbine industry by 4 percent in Denmark and 6 percent in Germany.

Date: 2014
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Working Paper: Borders, Geography, and Oligopoly: Evidence from the Wind Turbine Industry (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:143

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